Buying term life insurance policy. What is an Annuity State Farm

Types of Annuities

There are two main ways to categorize annuities: immediate vs. deferred annuities and fixed vs. variable annuities. The immediate vs. deferred category has to do with when your income payout begins. The fixed vs. variable category has to do with how your contributions are invested. Annuity.

Immediate Annuity vs. Deferred Annuity

With an Immediate Annuity, your money provides guaranteed payments to you that begin soon after you make your initial payment. Depending on the tax-qualified or non-tax-qualified status of your annuity, a portion or the entire payment can be included in your taxable income. The owner can elect to receive guaranteed payments for life, or elect payments to be made over a specified length of time (period certain).

With a deferred annuity, your income payments are usually put off for a period of time allowing the money you've contributed to earn interest generally tax-deferred. You choose when you want to start receiving income payments — typically, upon retirement.

Fixed Annuity vs. Variable Annuity

With a Fixed Annuity, the insurance company places money in high quality fixed-rate investments such as bonds, where the insurance company will earn a fixed interest rate for a certain period of time. For most fixed annuities, the insurance company guarantees a minimum interest rate that you will earn, often for a specified period of time. With a Fixed Annuity, the insurance company is taking the investment risk.

With a Variable Annuity, money is placed in market-based investments. This may include stocks, bonds, mutual funds, or money markets. You may have the option to move the money around among the different investments. In addition, the rate of return can vary based on the performance of the investments. With a Variable Annuity, the risk is taken by the annuitant, rather than by the insurance company.

Disclosures

Before investing, consider the funds' investment objectives, risks, charges and expenses. Contact State Farm VP Management Corp (888-702-2307) for a prospectus containing this and other information. Read it carefully.

Investing involves risk, including potential for loss.

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State Farm VP Management Corp. is a separate entity from those State Farm entities which provide banking and insurance products.

Variable annuities are long-term investments designed for retirement purposes.

Variable annuities have fees and charges that include mortality and expense, administrative fees, fund expenses and may include surrender charge, transfer processing fee and additional deposit rider charge.

Bonds are subject to interest rate risk and may decline in value due to an increase in interest rates.

You could lose money by investing in the Money Market Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

Guarantees are based on the claims-paying ability of the issuing State Farm life insurance Company.

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In a tax-qualified retirement plan, federal income tax deferral treatment is provided by the plan. No additional tax deferral treatment is provided by the annuity.

Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59 1/2, may be subject to an additional 10% federal income tax penalty. Dividends and gain from other investments may be taxed at capital gains tax rates (which are usually lower than ordinary income tax rates). The gain portion of variable annuity death benefit proceeds is taxable as ordinary income.

Insurance policies and/or associated riders and features may not be available in all states, and policy terms and conditions may vary by state.

Policy Series ICC14 15048, ICC14 15098, 15048, 15098, A15048, and A15098.

State Farm Life Insurance Company (Not licensed in MA, NY or WI)

State Farm Life and Accident Assurance Company (Licensed in NY and WI)

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Each insurer is financially responsible for its own products.